Help! Financial adviser at my bank - is it a bad idea???

Hey, folks. I have to admit that I am almost clueless regarding financial planning matters. Hopefully, someone out there is "clue-full". I went to my bank the other day to switch some accounts around, and the person practically scolded me (appropriately ) for not doing much financial planning. Over the past few months, I have been thinking about finding a financial adviser, but I just hadn't gotten around to it yet. I know I need to do it-- I don't want to be on the street at 65!

Anyway, it seems that the financial analyst service at the bank is free, and I assume that there must be a good reason why folks PAY a financial adviser! They seem to want me to sign up for some things with them at a follow-up meeting, but I'm hesitant because I'm not sure whether they'll drag me into things that benefit the bank! Is it better to get a financial adviser from a financial advising firm or company???!!!

Tara, the best financial adviser is an independent one who doesn't work for anyone but himself, and only has your best interests at heart. Remember, you get what you pay for. Go to Suze Orman's website, and read what she says on the matter.

(1) Any financial adviser who calls you cold-whom you don't know and have never heard of-should be sent packing. Hang up. A successful adviser doesn't have to look for clients. Clients seek her or him out.

(2) If an adviser has time to come to your home, something is probably radically wrong. When I was seeing clients—long before I wrote my first book—I didn't have time to breathe, let alone get in a car and drive for half an hour across town to a client's home and then drive back again.

(3) You should make it a point to visit a potential adviser's office, in any case. You'll want to pay careful attention to how he or she keeps his or her professional space. Is it neat? Are files in order? Is it busy?

(4) If you are married or have a life partner, a potential adviser should have found this fact out by asking and should see you only if you agree to bring your partner along or else have a very good reason why you prefer not to.

(5) A good financial adviser will ask you all—not some, but all—of the following questions: How is your health? (This is No. 1, in my opinion, since if you're not healthy you'll need first and foremost to plan for your medical care and possibly your income if and when you cannot work.) Are you in debt? (This is No. 2.) Are you responsible for aging parents? Do you have a will or trust? Will you inherit money someday? Do you need to make a major purchase like a new car or a new roof for your home? Do you have a retirement plan? Are you funding it to the maximum allowed by law? Do you have adequate insurance? Are you saving for your children's education? Only after an adviser fully understands your financial situation should he or she ask you how much money you have to invest.

(6) An adviser should be a Certified Financial Planner, or CFP® Professional, just as I am. That means that he or she cares enough about his or her clients to have gone through a two-year certification process, with continuing education requirements mandating that he or she stay up-to-date on the kinds of information that you need.

(7) You should be told up front how, and how much, a potential adviser will be paid. You shouldn't have to ask. The correct method of payment is by fee only. Any adviser who wants to be paid through commissions charged on the investments he or she makes for you has an incentive to move you in and out of stocks and other investments, perhaps in direct opposition to what's best for you.

(8) An adviser should never ask you to write a check to him or her. You should write checks only to a brokerage, an insurance company, or another financial services firm.

(9) If you already have an adviser, that adviser should be calling you in down markets as well as in up markets. Has your adviser called you in the past 12 months?

Personally I would not use the "free" bank financial advisor. These advisors are paid a commission based on what products they can sell you. For that reason they usually only present you with the products that make them money. I personally do not want a financial advisor who has this conflict of interest. I don't want to wonder if the investment is really the best one for me or just the best one for the financial advisor.

Find a financial advisor, check with friends or organizations you trust, who either gets a set fee up front or gets a percentage of your investment earnings. I prefer to use somebody who gets a percentage since that gives them the best incentive to invest well for me. These advisors will also have access to virtually every investment out there and not just the ones that pay the advisor a fee.

We lost 10 years of savings back in the late 90's based on bad advice from the financial planner from a well known financial company that we had been paying for. The important lesson we learned was that no one cares for your money as much as you do. We've recovered and done well based on our own research but admittedly, it's something you learn as you go along.

The important thing is that at your age, you can start saving a little bit now and you have the time to make it grow for you. Most people don't even think about retirement planning until they are in their 50's or later and by then you're running short of time and have to save a bundle fast.

It's good that you are thinking about this. There's a ton of books at the library. Suze Orman (yes some people think she's pushy) but she's a very popular financial planner and she speaks regular people speak in her books. You can also find out if you have a Fidelity Investments office in your area, call them and tell them you'd like to speak to someone because you are THINKING about doing some financial planning. Talk to your bank too. At this point, ask alot of questions and make it clear that you are doing some fact finding. Don't commit to anything until you've looked at a few options and find one you feel comfortable with.

Depending on where you work - they might also provide you some online tools to help with planning. Since the fate of social security in the future is very questionable, seems like the government and the work place are offering more opportunities for people to save up for their futures.

cbmare, the best financial adviser is an independent one who doesn't work for anyone but himself, and only has your best interests at heart. Remember, you get what you pay for. Go to Suze Orman's website, and read what she says on the matter.

Babenwaiting, thanks for all the advice. However, it was Tara that was asking.

I did read all your advice. I'd forgotten about Ormen. We do have an advisor who is not at the bank.

__________________
love n kisses,

Life does not happen in a vacuum. Lifestyle changes must transcend habits and routines. - thanks midwife.

cbmare, I'm so sorry! Thanks for alerting me to my mistake. I meant all that advice for Tara, of course! I have edited the post to correct it now. happy2be, I really like Suze! Always go to her books/website when I'm wondering ...

cbmare, I'm so sorry! Thanks for alerting me to my mistake. I meant all that advice for Tara, of course! I have edited the post to correct it now. happy2be, I really like Suze! Always go to her books/website when I'm wondering ...

Not a problem! I appreciated the advice as well.

Don't you wish that mistake was the biggest problem you had in life?

__________________
love n kisses,

Life does not happen in a vacuum. Lifestyle changes must transcend habits and routines. - thanks midwife.

Tara: In addition to Suze Orman, I really like Dave Ramsey. He has a radio show and several books and dvds. DH and I are young and are doing our best right now to get on top of things financially. It seems ridiculous to me to spend our hard-earned money on someone telling us what to do with what's left of that money. (Some of them are really expensive!) DH and I are doing things our way, but feel confident that we've prepared for life's emergencies and our futures well without having someone do it for us. I did a lot of my "research" from books at the local library and Dave's website. When we finally got to a comfortable place, I purchased three of his books for our personal library. I refer to them all the time!

Thanks you guys! I'm 31 and I feel like I'm way behind on the money management/retirement planning stuff. I've been in school for a million years, and I just started what I would consider my "real job" almost a year ago. I gotta get on top of things!

The biggest lesson I have learned from my fiance, who actually gets this stuff, is that you should max out your 401(k), or at least contribute enough to get to full employer match. Because it is taken out pre-tax, I have had approx. $100 less each paycheck (not an insignificant amount to me) but I will have received about $6k from my employer this year through the match. It's like getting a raise!

Also, even independent financial planners do get commission from the companies whose products they sell. Before you speak to anyone, think through your goals. A good, honest financial planner can only help you if you know where you want to go.

I get a spiel, too, whenever I deal with anyone "live" at the bank (not to mention a ton of mail from their financial planner)...one reason why I deal with the ATM 95% of the time. I have an independent fp who is actually someone that did my mom's taxes for years and years and between her, myself and my sister, we actually have triple tax free funds that he maintains for the three of us. I closed down 2 cds at said bank and put that money into those funds. I'll be honest, I have a significant amount of money in both my bank savings and checking accounts earning practically nil interest and I understand it's somewhat foolish on my part not to siphon more of that elsewhere but I really don't like their hard sell. I mean, I know it's their job and I know I should actually take more money out of those low-interest accounts but quit pushin' me! And they're not realizing that if I take that money out it's not being re-deposited with them.

I have a question for you guys that have any kind of retirement accounts. I've always had an aversion to putting money into something that I couldn't touch until a certain age. How are those types of accounts any more beneficial than say, those triple tax free funds I mentioned earlier where I can either choose to receive the interest by check or it just gets re-invested? I mean, I'm saving money away and it's building for the future, there's no tax on the interest...why should I, or shouldn't I, just keep building with those? (BTW, the job I've had for the last 7 years offers NO benefits or plans or accounts whatsoever.)

__________________Ellie

Last edited by trekkiegirl : 11-17-2007 at 05:06 PM.

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